If your auto loan is past due, you may be able to refinance it, which involves getting a new loan with a different terms to pay off your current one. The best-case scenario for refinancing is a shorter loan term and a lower interest rate and monthly payment, particularly if your credit has improved since the approval of your first loan.
While there are plenty of respectable refinancing options available, there are con artists out there who are just waiting to take your money and run off with it. This post will explain the operation of car loan refinancing scams, how to spot them, and what to do if you fall for one.
If you’re thinking about refinancing your current auto loan, our Auto Refinance Calculator can help you determine whether it’s a wise financial decision.
In today’s world, where financial options are abundant, it’s crucial to be able to discern legitimate companies from fraudulent ones. This is especially true when it comes to refinancing your auto loan, as falling victim to a scam can have severe consequences.
To help you navigate this process safely we’ve compiled a comprehensive guide on how to check if a refinance company is legitimate. By following these steps, you can protect yourself from falling prey to scams and secure the best possible refinancing deal for your needs.
1. Research the Company’s Reputation
a. Online Search:
Start by conducting a thorough online search of the company’s name. Seek feedback from impartial websites such as Trustpilot, Consumer Reports, and the Better Business Bureau (BBB). These platforms can offer insightful information about the company’s performance history and level of customer satisfaction.
b. News Articles:
Check for news articles or online mentions of the company. This can assist you in identifying any possible concerns or issues surrounding the business.
c. Domain Name Registration:
Check the website’s registration date to find out how long it has been live. A newer website might be a cause for concern.
d. License Verification:
In many states, loan brokers and companies must be registered. For information about the company’s license, visit their website and confirm it with the attorney general’s office in your state.
e. Secure Website:
Before entering any personal information, ensure the website is secure. Look for a padlock icon in the URL and verify the security certificate is up-to-date.
2. Beware of Phishing Scams
a. Misspelled Words:
Be cautious of emails or messages with misspelled words, either in the content or the sender’s email address. Hover over the email address to see if it matches the company’s official domain.
b. Generic Email Addresses:
If the email address is generic (like @gmail.com), it’s likely a scam. Legitimate companies typically use their own domain names for email addresses.
3. Investigate the Business Location
a. Physical Address:
Look for a physical address on the company’s website and verify it using Google Maps. Be wary of companies with only a P.O. Box address.
b. Reverse Phone Lookup:
If you receive a call from the company, consider doing a reverse phone lookup to see if the number is legitimate.
4. Check the Better Business Bureau (BBB)
The BBB website provides information on a company’s accreditation, customer reviews, and any complaints filed against it. A good BBB rating and positive customer reviews can indicate a reputable company.
5. Trust Your Gut
If you feel uncomfortable or pressured during the process, take a step back and consider why. If something doesn’t feel right, it’s best to err on the side of caution and walk away.
6. Consult with Regulators
If you’re still unsure about a company’s legitimacy, contact your state’s attorney general’s office or the Consumer Financial Protection Bureau (CFPB). These agencies can provide additional information and guidance.
Additional Tips
- Beware of offers that are too good to be true. If a company promises exceptionally low interest rates or unrealistic terms, it’s likely a scam.
- Never pay any upfront fees. Legitimate lenders typically deduct origination fees from your loan disbursement.
- Protect your personal information. Be cautious about sharing your bank account information or login credentials with any company.
- Consider using a reputable online loan marketplace. These platforms can help you compare offers from multiple lenders and find the best deal for your needs.
By following these steps, you can significantly reduce your risk of falling victim to a refinance scam. Remember, it’s always better to be cautious and do your research than to rush into a decision you might regret later.
Frequently Asked Questions
Q: What are some red flags that a refinance company might be a scam?
A: Red flags include:
- Requiring upfront fees
- Offering unrealistic interest rates or terms
- Pressuring you to make a quick decision
- Having a poor online reputation or BBB rating
- Using suspicious email addresses or phone numbers
Q: Where can I find legitimate refinance companies?
A: You can find legitimate refinance companies through online loan marketplaces, banks, credit unions, and reputable online lenders.
Q: What should I do if I think I’ve been scammed?
A: If you think you’ve been scammed, contact your local law enforcement agency and file a complaint with the Consumer Financial Protection Bureau (CFPB).
Additional Resources:
- Consumer Financial Protection Bureau (CFPB): https://www.consumerfinance.gov/
- Better Business Bureau (BBB): https://www.bbb.org/
- Federal Trade Commission (FTC): https://www.consumer.ftc.gov/
By staying informed and taking the necessary precautions, you can protect yourself from scams and find the best possible refinance deal for your needs.
What Are Auto Loan Refinancing Scams?
Auto loan refinancing scams are when people pretend to be lenders, promising customers lower rates through refinancing. But really, they just take people’s money and give them no financial services in return.
Auto loan refinancing scams begin with false advertising, plain and simple. The ads may include:
- Fake customer testimonials
- Money-back guarantees
- Claims about how much money you’ll save monthly
- A legitimate company’s name or a variant of the name
These advertisements can be found online, in the classified section of magazines and newspapers, or even on fliers distributed throughout your community.
The con artist may advise victims to cease making auto payments to their existing lender after they reply to the advertisements, claiming that discussions are still ongoing. They may charge the unsuspecting victim an “enrollment fee” or “application fee,” often several hundred dollars. It’s possible that victims of scams won’t realize they’ve been taken advantage of until they get a notice from their lender about overdue payments or, worse, until their cars are repossessed1. What a rude awakening!.
Search the Lender Registry
See if the lender is registered with government agencies.
- State attorney general: https://www.consumerresources.org/file-a-complaint/
- Banking/financial services regulator: https://www.consumerfinance.gov/ask-cfpb/how-do-i-find-my-states-bank-regulator-en-1637/4